Artradis Capital Management co-founder Stephen Diggle's new hedge fund is off to a strong start—relatively.

Singapore-based Vulpes Investment Management launched its LAVA fund—which stands for long Asian volatility and arbitrage—on May 1, just in time for hedge funds to begin their summer swoon. But LAVA, which debuted with US$30.5 million, almost all of it partner capital, is up 1.5% since then, Bloomberg News reports.

LAVA runs a strategy similar to the late Artradis Barracuda Fund, which Diggle and co-founder Richard Magides shut down earlier this year after two years of negative returns. The fund is currently putting its money into "relative value opportunities" in Asian stocks, as well as gold options and credit default swaps.

"I'd rather be long corporate bonds than government bonds in essence because I see private prosperity and public squalor," Diggle told Bloomberg. "I just came back from Italy where the cars are expensive but the roads are bad. People have money but governments don't."

"I'm not sure if the next crisis will be centered on the stock markets," Diggle explained. "It's likely to be centered on government debt markets, currency markets and probably commodity markets."